09 Jul Generic Trademarks in a Digital World
Entering the new decade, we may have thought the populace was immersed in the digital world; however, the Covid-19 pandemic has surely intensified mankind’s digital presence. With the expansion of technology, millions have been transported to a digital world, which has implications in many areas of the practice of law. For example, courtrooms, businesses, and firms have been forced to hold meetings, hearings, and the like virtually. In fact, for the first time, the Supreme Court heard oral arguments via telephone conference call in U.S. Patent and Trademark Office v. Booking.com. The Court was presented with the question of whether BOOKING.COM is ineligible for federal trademark registration.
In an 8-1 decision, the Supreme Court on June 30, 2020 ruled in favor of Booking.com and permitted the registration of BOOKING.COM as a service mark for online hotel booking services. In this case, the Court rejected the USPTO’s per se rule that the combination of a generic term with a generic internet-domain suffix such as “.com” renders the combination generic. The Court stated that whether a term “as a whole” is generic depends on consumer perception.
Booking.com submitted survey evidence showing that consumers do not perceive BOOKING.COM as synonymous with (i.e. the genus of) online booking services. The Court concluded that because BOOKING.COM is not viewed as generic by consumers, the term is not generic.
Trademark law protects marks that distinguish a particular source of goods or services from another. Traditionally, a trademark analysis begins with categorizing the mark to determine whether a term is sufficiently distinct to identify its source. Those categories include generic (“accounting firm” for services accounting services); descriptive (“cold and creamy” for ice cream); suggestive (“CarMax” for car dealerships); arbitrary (“Apple” for computers); and fanciful (“Kodak” for cameras).
However, it appears the Court categorized the term together with the viewpoint of the consumer. Relying on the Lanham Act, the Court focused on the “bedrock” principle of the Act suggesting consumer perception to be fundamental. Consumer perception is what drives the categorical nature of the mark. It is also the underlying principle for a likelihood of confusion analysis. Whether a mark “in its entirety” is likely to cause confusion or where that mark lies on the distinctiveness scale, depends on what the consumer perceives.
Here, the Court concluded that consumers do not understand BOOKING.COM to represent an entire genus, but rather see it as a specific source identifier. This begs the question of whether any generic term could become a trademark by adding “.com” since only one entity can occupy a domain name.
Along the same line, the Court was silent on whether this decision impacts only online businesses versus businesses that conduct business online and in-person. With respect to the latter, the Court rejected the USPTO’s argument that adding “.com” to a generic term is like adding “company” to a generic term, which “only indicates that parties have formed an association or partnership to deal in such goods.” The Court reasoned that because only one entity can occupy a particular domain name, a “‘generic.com’” term may convey to consumers a source-identifying characteristic: an association with a particular website – which serves to uphold an important premise of trademark law, i.e., to avoid unfair competition.
This ruling could have meaningful implications with respect to infringement and registration. In this case, the USPTO argued that allowing trademark protection for “booking.com” would hinder competitors from being able to use the term “booking” with “.com” for booking services. The Court noted though that whether a mark infringes turns on whether it is likely to confuse. It also stated that whether the mark is likely to confuse depends on the distinctiveness of the mark. The Court reasoned generic marks may encompass a “crowded field of look-alike marks” forcing the consumer to carefully choose one source identifier over another. The Court also suggested competitors may put their worries at ease if using a mark “fairly and in good faith […] merely to describe her own goods” under the doctrine of classic fair use.
This may have opened uncharted territory for the US Patent and Trademark Office as competitors may bombard the Office with similar “generic.com” marks. This may even cause more inconsistencies with registration depending on the examiner’s perception of what is likely to cause confusion. Nonetheless, attorneys will most certainly use the holding of Booking.com in an attempt to register generic/descriptive marks teetering on the edge of confusion.
With respect to infringement, this decision may have inadvertently raised the bar for likelihood of confusion, paving the way for future domain names such as “ebooking.com”; WeRBooking.com”; “hotel-booking.com”; etc. so long as it’s a bona fide use. However, lower courts may be flooded with litigation concerning likelihood of confusion as competitors fight for their source identifier in the digital marketplace. The bar would almost have to be raised else the competitor with the most money, who is able to invest in branding to ensure consumer perception, would probably win the day. Because the Court declared that generic terms are not necessarily generic so long as consumers perceive a mark to identify a source, businesses may decide to invest heavily into promoting their mark to achieve secondary meaning. This activity favors large companies with significant capital to invest in brand promotion for their “generic.com” marks. How would smaller companies or start-ups compete?
In light of these obvious consequences of this decision as well as the unforeseen ones that are certain to arise, we can expect to see trademark owners and practitioners seeking clarification from the Courts, the USPTO, and Congress, especially as more businesses transition to the digital world.